THE DEGREE OF AGREEMENT BETWEEN OWNERS AND HOTEL MANAGERS IN HR ISSUES:
THE LUXURY HOTELS IN ATTICA AS A CASE STUDY
Dimitrios Laloumis¹, Konstantinos Marinakos², H.M. Saad³
¹ TEI of Athens, Greece
² TEI of Athens, Greece
³ Alexandria University, Egypt
ABSTRACT
General Manager (GM) plays a key role in the operation and efficiency of a hotel business, but the constantly changing conditions of competition between businesses and intense changes in their operation and organization often lead to differences of opinion between hotel owners and / and managers through hotel and GM hotel management (HMC) contracts and / or reduced autonomy of decision makers in the key administrative functions of the hotel business.
In many hotel units GM is an employee of the business in which the operator or owner of the operator or the owner and sometimes both parties is employed. In the present survey, the degree of disagreement between Hotel Owners (OH) and General Managers, as well as between GM Hotels and GM Hotels with Hotel Management Contract (HMC) or Hotel Chains, is being investigated based on the high class hotels in Attica in Greece.
Keywords: hotel management, decision making, degree of agreement, operations, human resources
1. INTRODUCTION
Many researchers have highlighted with their studies that the role of CMs is fundamental to the success of a hotel (Mayock 2012, Woods et al., 1998). At the same time, many modern Hotel Owners do not manage to have full control over their business, although they are officially responsible for their hotel, they can freely, based on their managerial right, supervise all their parts of their business and control all the financial and accounting statements that reflect the economic performance of the company (Mintzberg 1975; Morey and Dittman 2003). General Managers, on the other hand, are responsible for running the business and are apologized to hotel owners or to higher-ranking HMCs or hotel chains (Corgel, Mandelbaum and Woodworth 2011).
Given the structure and complexity of the hotel's operation, GM's power to make key ownership decisions depends largely on the level of autonomy that is provided to it. So far, we've seen some studies on the extent of GM's autonomy or the effect of restrictions on their power. More simply, autonomy is the extent to which one can make important decisions without the consent of others (Brock 2003).
The reason for this research is the dramatic changes in ownership and management structures in the hotel industry over the last thirty years (Slattery 2012). In many hotel facilities, GM manages issues relating to ownership and the overall operation of the business according to the owner or operator's specifications and in line with the strategic objectives of the business.
2. LITERATURE REVIEW
Many studies have shown that the disagreement between hotel owners (HOs) and general managers (GMs) and autonomy may vary across different functional areas of a hotel (Vachani 1991), understanding that autonomy requires consideration of the different functional roles GMs can play and whether a hotel owner would like to limit GM's autonomy in these areas.
The researchers have allocated the responsibilities of GMs to five key areas: strategy, operations, marketing, human resources and finances (Aldehayyat 2011, Harper, Caroline, Wilson, 2005q Ladkin 2002, Nebel and Ghei 1993, Nebel, Lee and Vidakovic 1995; O'Neill 2000, Phillips 2000). Therefore, we consider that the degree of disagreement or agreement between the two parties (HO & GM) and the granting of autonomy to decision-making should be considered in these five dimensions. Particularly :
Regarding operation, apparently GM is the person who is primarily responsible for them at a hotel (Ladkin 1999), but must at all times follow and implement the operational standards and procedures (Lenehan 2000). These operations are enforced either by the owner or by HMC (O'Neill and Mattila 2010, O'Neill and Xiao 2006), but this obviously does not apply to independent hotels (Jones and Lockwood 2004).
Regarding the human resources dimension that we are focusing on in the present study, if these are HMCs, these companies have specific human resources practices, and GM is extensively engaged in human resource management issues, and there is rarely a conflict of views with managers. In fact, human resources management issues are regularly reported as the most worrying both for GM and general executives (Enz 2001, 2009).Even if it is a hotel chain that defines strategic human resources management practices, and even if employee selection, training and development processes are often subject to company policies, most of the staff are recruited and trained (Maxwell and Watson 2006). Independent hotels are, in the meantime, solely responsible for their own human resources issues, although this is an area where owners are known to be very often involved (Guilding 2006, Nolan 2002).
In the field of marketing, most HMC or hotel chain companies maintain organized marketing segments that GMs rarely interfere with and set signal standards. In this context, GMs have limited marketing responsibilities and are primarily responsible for achieving performance targets. On the other hand, independent hotels may have some similar choices through partnerships and marketing consortia to acquire some of the distribution benefits usually associated with chain-linked hotels (Holverson & Frederic, 2006). In this case, GM's autonomy over marketing decisions may be less restricted in these hotels due to the presence of fewer official policies and of course reduced and disagreement with landlords because marketing is an area that seldom intervenes.
With regard to economic decisions, due to the critical nature of revenue and expenditure management, as well as financing and accounting for hotel units (Singh and Schmidgall 2005), we consider that directors exercise considerable control over this area. GMs are often responsible for making decisions about how to achieve specific economic goals (Harris & Marco, 2001), but the breadth of decisions does not necessarily extend to strategic and critical hotel financial decisions. Given the critical nature of the financial results from the owner's point of view, it is likely that the limitations of autonomy will be greater in economic matters than in relation to the functions, HR and marketing responsibilities discussed above.
Finally, in terms of strategic planning, studies have been reported on whether hotel owners (HO) are solely responsible for strategic planning (Olsen 1991) or whether GMs are involved in strategic decisions (Gilbert & Yvonne, 1997, Hodari and Roper 2009). It seems that GM in HMC-operated hotels have limited participation in the strategy, as they are subject to the strategic choices of their parent company and are therefore not free to follow their own decisions (Ramanathan 2012). On the other hand, as independent hotels do not have a corporate level of dedicated and formal structures for creating or implementing strategies, they are likely to rely more on GM for strategic decisions.
In addition to the above, a number of factors that partly depend on the autonomy of GM's decision-making and the degree of agreement between HO and GM, such as:
A key factor is the ownership and management structure of the hotel: that is, the independent hotel or relationship with an HMC company - greatly affects the size of GM's responsibilities and hence the autonomy and / or the degree of disagreement with the owners - managers. The independent hotels we look at in our primary survey are not linked to any brand, chain or co-operation with one of the independent management companies operating both non-branded and branded hotels on behalf of the owners. Because independent hotels are largely free to operate with less restrictive restrictions, GM must have relatively high levels of freedom to manage their hotels. Of course, even in independent hotels, if the owner is not GM and GM, we would not expect the owners to be completely inactive in managing their assets (Birdir 2002).
Another factor is the size of the business: researchers have long understood that, as the size of the organization grows, communication, coordination and social control are becoming more difficult (Child 1972, Khandwalla 1972). Indeed, one reason why hotels are increasingly operating under management contracts (HMC) is the increasing complexity and competitiveness of the industry (Morrison and Conway 2007). Size increases complexity, which can create more incentives for hotel owners (HOs) to limit management autonomy to GM or to come up with a more confrontational view. This in turn increases rigidity as players redistribute resources to support control functions and rely on increasingly bureaucratic processes rather than more ad hoc methods. As a result, larger corporations are often conducting administrative controls through standardized and more frequent communications to systematize the information needed for coordination and control (Bruns and Waterhouse 1975).
Last but not least, human capital is also the focus of research in this analysis: for GM, knowledge, skills and competencies can be a source of bargaining power, but it is also reasonable that a hotel owner (HO) will give more power to a trained, experienced GM. Also, a high level of human capital can allow a GM to gain more autonomy and this can enable him to work more efficiently for the interests of the hotel owner or manager of a hotel unit (Jensen and Meckling 1976).
3. RESEARCH METHODOLOGY
As we can see from the above theoretical approach, a single and general measure would be difficult to identify to reflect the nature of GM's autonomy in a hotel and its degree of agreement or not with the owners.
For this reason, we are obliged to formulate some research cases with an emphasis on business operations, human resources and economic strategic issues.
Basic Primary Hypothesis: General Managers (GMs) have a higher degree of decision autonomy and a lesser dimension of opinion with hotel owners on business, commercial and human resources than on economic and strategic issues.
3.1 Sample of the research
The sample selected was 316 high category hotels (over 3 stars) in the Prefecture of Attica, and with the help of a structured questionnaire, we collected data from 115 hotels addressed to either the Owner / Managing Director of the hotel or the General Manager. According to the questionnaires collected, which were identical to the reference to the recipient, there were no significant differences in the response rate of the two subjects of the survey (HO & GM). The percentage of participation in the sample was of the order of 36%, which is considered quite satisfactory for the type of research.
3.2 Variable and Statistical Criteria of Research
As an independent variable we used ΄΄the type of relationship with the hotel΄΄ (Owner/Administrator or General Manager). Participants were asked to state whether they are Owners / Managers (GM) or General Managers (GM). Thus, the first case was the basic case that took the value 0 and the second case was set equal to 1. In this context, the Owners / Administrators accounted for 44% of the sample.
Table 1
Summary Statistics (N=115)
The size of the hotel, measured by the number of rooms, ranged from 14 to 1,230 (average = 180, M = 284, SD = 355). For all analyzes we used the log-transformation of the number of rooms to reduce high leverage and make the resulting error more normally distributed. We also noted that Hotel Owners / Managers were considerably less than GMs, as the average number of rooms for hotels managed by owners was 152 (median = 180, SD = 124) compared to 450 for Hotels operated by General Manager (median = 305 , SD = 467).
Human capital was measured by asking respondents the level of experience and education. Both were collected as categorical variables, with five categories for experience and three for education.
Decision-making autonomy: Owners / Managers and Directors-General were asked to assess their influence on decisions related to the five areas of interest: strategy, operations, marketing, human resources and finance using four questions for each. Ratings are completed on a Likert-type scale, ranging from 1, "Company-Level Decisions" ("From Owner" for Independent Hotels) to 5, "You Make The Decision". The alphas factor for all other measures was equal to or greater than .90.
3.3 Results
To test the assumptions, we used a combination of structural equations modeling, t test. We found that, in general, GM reported more autonomy and a lesser degree of disagreement than the neutral (middle) point of the scale (ie all media were significantly larger than 3.0 in p <.0001), arguing that GMs generally have significant autonomy in place.
Nevertheless, levels of autonomy varied mainly among the respondents (with all standard deviations greater than 1). In each case, based on the measurements, there is a greater degree of autonomy in functions, marketing and human factor, and the data partially support the Research Hypothesis . In particular, the results show that autonomy of operations, marketing autonomy and autonomy of human resources are greater than their financial autonomy (p <.001 for businesses and p <.0001 for marketing and human resources).
However, strategic autonomy was higher than the case. Only marketing autonomy was significantly greater than strategic autonomy (p <.01). Also, unlike expectations, business autonomy was actually lower than strategic autonomy (mean difference of 0.18, p <.05).
Table 2 Comparison of Autonomy across Dimensions and Governance Structures
Also, some other interesting, non-hypothetical results emerged. We expected relative levels of autonomy for business, marketing and human resources. What we found, however, were significant differences in the average level of autonomy in these three dimensions. Functional autonomy was the lowest of three (with differences in meanings significantly in p <.0001), while marketing autonomy was the highest (statistically higher than the autonomy of human resources at p <.01).
It was also expected that levels of economic and strategic autonomy would be similar, but instead considered that economic autonomy was significantly lower (p <.0001) than that of the strategy. Overall, examining the means in the five dimensions of autonomy revealed that there are more differences between the levels of autonomy provided in the different functional areas than originally assumed.
4. CONCLUSION
As we predicted, we found that GM in Hotels Hotels or HMC Company Agreements have lower autonomy in GM's operations, marketing, and human resources management in hotels managed by the owners themselves. However, we did not find that the same applies to strategy and funding. This finding may require a revision of the view that hotels managed by the owners themselves do not have strategic planning practices.
We think that the Directors-General prefer to continue to be more involved in economic and strategic issues, as these are key added-value functions that they can provide.
Individuals seeking to become CMs can benefit from focusing on traditional areas of business, marketing and HR, where hotel owners and HMCs expect their GMs to have a comparative advantage and excel, so they will there is also a greater degree of agreement.
We do not propose that funding and strategy are insignificant to the hotel or career of CMs (especially because the strategy seems to be relevant) but only that skills in these areas may not be the decisive factor in achieving a General Manager. Those who seek to become GMs may want to consider whether their careers will bring them to hotels managed by their own owners or HMC hotels. GMs who work for HMCs or who feel that they can work in HMC-based hotels are also encouraged to obtain advanced grades if they also want to improve the chances of autonomy and a greater degree of agreement with the owners.
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